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Apple Earnings Disappoint; Markets Mixed This Morning

Reaction to Apple's earnings report will be a primary focus today.

The most significant story line this morning will be market reaction to a disappointing earnings report from Apple(Nasdaq: AAPL). Shares reacted immediately in aftermarket trading, down about 5%, where they remained in premarket trade this morning. It can be difficult to discern the reason behind the lower-than-expected top and bottom lines for Apple. The company, which is largely driven by its two blockbuster products, the iPhone and iPad, is affected by somewhat unpredictable consumer behavior ahead of the introduction of new products like the iPhone 5, as well as the growing importance of markets like China. Apple CEO Tim Cook alluded to seasonal impacts in China that weighed on iPhone results while declining to blame the global economy for the poor results and lowered third-quarter outlook.

The results are affecting the major indexes this morning -- particularly Nasdaq Composite, given that Apple accounts for 12.7% of the index's movement. Here's a snapshot of where futures markets stood as of this writing.

Futures Index

Gain/(Loss)

Gain/(Loss) %

Value

Dow Jones Industrial Average(INDEX: ^DJI)

50

0.40%

12,574

Nasdaq

(12)

(0.47%)

2,536

S&P 500(INDEX: ^GSPC)

4

0.32%

1,333

Source: Yahoo! Finance.

Aside from Apple, notable S&P 500 earnings reports will come today from Ford, Corning, PepsiCo, and Whole Foods, among others. Dow components Caterpillar(NYSE: CAT) and Boeing(NYSE: BA) are also reporting results. Expectations for Boeing call for earnings per share of $1.13, down from $1.25 one year ago. For Caterpillar, earnings estimates stand at $2.28, a huge increase from last year's $1.52 because of acquisitions. Revenue growth for the mining and construction equipment giant is expected to rise 20% to $17.1 billion. Key for Caterpillar will be the effect of slowing growth in crucial emerging markets like China and Brazil, as well as the negative impact from Europe's recession and anemic economic growth in the U.S.

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